The European Union is preparing to impose the steepest tobacco tax hikes ever introduced across the bloc, a move that has triggered alarm in Greece and Cyprus, where smoking rates remain among the highest in Europe and the economic impact on households could be severe.
During recent Eurogroup and ECOFIN meetings held in Luxembourg on October 10, the European Commission presented a proposal to update EU rules on the minimum excise duty rates applied to tobacco and related products (the Tobacco Taxation Directive).
Under the proposed plan, developed in cooperation with a group of northern European countries led by France and the Netherlands, the minimum excise duty would increase by 139 percent, from €90 to €215 per 1,000 cigarettes.
If implemented, the retail price of a standard 20-cigarette pack, which currently costs around €5 in Cyprus, could surge to €7–€7.50. A typical smoker buying one pack per day would see their monthly cost rise from about €150 to over €210, adding up to an extra €700–€800 per year, roughly equivalent to a full monthly pension. Even occasional smokers would feel the pinch, as each pack could cost €2–€3 more, nearly the price of a coffee.
Risk of Rising Smuggling
Authorities in Greece and Cyprus are particularly concerned about the risk of increased tobacco smuggling, a problem already evident in areas near the occupied north of Cyprus, where tobacco products are significantly cheaper.
Greg Kamberis, Managing Director of Philip Morris Cyprus and Malta, recently warned during a Cyprus Forum panel that excessive hikes in tobacco taxation neither achieve fiscal goals nor improve public health outcomes. “When prices rise too sharply, consumers turn to the black market,” he said, urging policymakers to consider Cyprus’ specific circumstances and the impact on different tobacco categories before deciding on such measures.
Greek Objections at ECOFIN
According to Greek state broadcaster ERT, Greek Minister of National Economy Kyriakos Pierrakakis voiced reservations during the October 10 ECOFIN meeting, stressing that “when we increase taxes excessively, smuggling also rises.”
While reaffirming that public health is a top priority, Pierrakakis warned that a sudden and uneven increase could harm competitiveness and investment. “Based on our experience,” he said, “overly aggressive tax hikes on tobacco lead to more smuggling. If prices rise faster than the market can absorb, the impact on competitiveness must be considered. Transitional periods might be necessary for implementation.”
Eurobarometer: Southern Europe Still Smoking Heavily
According to the most recent Eurobarometer data, one in four EU citizens smokes, with the highest prevalence in eastern and southeastern Europe. Bulgaria leads with 37 percent smokers, followed by Greece (36 percent), Croatia (35 percent) and Romania (34 percent). Cyprus ranks seventh at 29 percent, while Sweden reports the lowest rate (8 percent), followed by the Netherlands (11 percent) and Denmark (14 percent).
The survey also reveals a gender gap: 28 percent of men and 21 percent of women smoke. Over half of EU citizens (56 percent) have never smoked, while young men facing financial hardship, especially those aged 25 to 39, are the most likely to smoke (32 percent).
For Greece and Cyprus, the figures highlight the scale of the challenge. Both countries combine high smoking rates with relatively low disposable income, meaning the proposed EU tax reform could prove a further blow for consumers and small retailers already under financial pressure.